AIB has secured a further €200 million from the Strategic Banking Corporation of Ireland (SBCI) to lend to Irish businesses.

The funding will be made available to businesses and farmers at a variable interest rate of 4.5 per cent.

The bank said it had already approved €200 million of business credit for more than 5,000 customers since the first tranche of the SBCI fund was launched in March.

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The funds have been sourced by the SBCI from the European Investment Bank, German promotional bank KfW and the Ireland Strategic Investment Fund (ISIF).

“There was strong demand from the hospitality, retail, services, agriculture and manufacturing sectors countrywide,” AIB said, noting the average drawdown was €28,500, but loans ranged in size from €1,000 to €1 million.

AIB chief executive Bernard Byrne said the additional €200 million will help small businesses and farmers to grow their businesses, create employment and support the economy .

The 4.5 per cent rate is 2 points below AIB’s standard variable rate business loan offering, the discount being provided by a combination of the SBCI and AIB, he said.

Minister for Finance Michael Noonan said: “AIB’s partnership with the SBCI has been a huge success. SMEs have seen the real benefit as they are getting access to lower cost funding to grow their businesses.”

SBCI boss Nick Ashmore said: “AIB’s SME customers have received approval for all the €200 million we originally allocated to AIB. It is a sign of the very strong appetite for SBCI loans that we have reached this stage so quickly and we are delighted to provide AIB with another €200 million in fresh funding to meet this continued demand.”